Fair Tax Nation

Replace All Federal Taxes on Income with the Fair Tax Act , HR 25

Response to those who say FairTax unconstitutional


I have seen some information posted in a various places (including some tea party type sites) that the FairTax is unconstitutional.  Here are the basics from the Constitution regarding taxation. The language in section 9 aboutdirect taxes does not apply to the FairTax because the FairTax is an an indirect tax.  Below I have a quote from a CBO paper defining it as an indirect tax.  

Karen Walby, Ph.D.

The US Constitution sets forth only a few criteria regarding taxation. 

Section 8, Clause 1 states that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”  Section 9, Clause 5 states that “No Tax or Duty shall be laid on Articles exported from any State.”  . 

The FairTax is by definition a form of excise tax (see the definition of excise tax below) so it meets the first criteria of the type of taxes that Congress can levy. Since the FairTax rate and definition of the tax base would be the same in every state, it meets the second criteria that excises shall be uniform throughout the United States.  In addition, the FairTax does not tax exports.  Therefore, the FairTax appears to meet both the spirit and the letter of the Constitution, and would therefore be in compliance with the Constitution.

In the case of the income tax, it is a different story.  Section 9 states that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”   The income tax is a direct tax, but the only direct tax that the Constitution allows would be one that is based on the population, for example, what is known as a “head tax”, i.e. so much money per person.  That is why the 16th amendment was necessary.   

Definition of excise taxes:

Excise taxes are categorized into two categories by their structures:   (1)  Ad Valorem - A fixed percentage charged on a particular good or service.  These are normally referred to as sales taxes.  This is what the FairTax is.  (2) Specific - A fixed dollar amount dependent upon the quantity purchased.  Today, these are still referred to as excise taxes, i.e. so many cents per gallon of gas.  


[“An indirect consumption tax in which the base consists of the sales of businesses to non-businesses (a value-added tax or the retail sales tax)”  Quote from Congressional Budget Office paper, “Comparing Income and Consumption Tax Bases,” July 1997, page 37. 


Excerpts from the US Constitution related to taxation powers of federal government.

Article. I.

Section. 2.

Clause 3: Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.

Section. 8.

Clause 1: The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; [The FairTax is uniform throughout the US.]

Section. 9.

Clause 4: No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken. 

Clause 5: No Tax or Duty shall be laid on Articles exported from any State.  [The FairTax does not tax exports.  It only taxes goods/services consumed in the United States.]

16th Amendment

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. [This is further evidence that an income tax is a direct tax; a consumption tax is an indirect tax, it is not levied directly on the individual himself or herself but only indirectly as the individual consumes.]

Karen Walby, Ph.D.

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Comment by Kerry D. Bowers on April 17, 2013 at 2:12pm

The FairTax is, in effect, an excise tax but collected at the time of sale rather than applied prior to the sale as is typical to most excises to which we are familiar.  The government could just as easily apply the FairTax as the typical excise tax, but then we would not be cognizant of the rate of the tax, the amount we are paying, and the cost of government in our lives.  Today, there are many categories of excise taxes and they are growing.  The latest is the 10% tax placed on tanning ‘services’ and the new 2.3% medical equipment (property) tax. 


The FairTax is an indirect tax, not a direct tax.  Unfortunately, the representatives to the Constitutional Convention failed to explicitly define indirect and direct taxation.  Recognizing this omission, Rufus King, a representative from Massachusetts to the Constitutional Convention, specifically asked the question to the Convention to which “no one answered.”   Looking to the Federalist Papers, in No. 36  Alexander Hamilton makes reference to taxes “of the direct and those of the indirect kind" and, just as both stated and implied in the Constitution itself, notes the latter (indirect taxes) to be “duties and excises on articles of consumption.”  He goes on to address the former (direct taxes) by confining his remarks  to the opposition’s concern for “real property or to houses and land.” The U.S. Court of Appeals for the District of Columbia has followed this reasoning in the statement, “Only three taxes are definitely known to be direct (1) a capitation … (2) a tax upon real property, and (3) a tax upon personal property.”


In the 1895 U.S. Supreme Court Case,  Pollock vs. Farm Loan and Trust, which arose from the Wilson Gorman Tariff Act of 1894, the court did not explicitly state that all income taxes are a direct tax or a violation of the Constitution. They did, however, find that the taxing of income from the rent of real and personal property to be a violation of direct taxation requisites (apportionment).  The court also went on to uphold principles of intergovernmental immunity with regard to income from dividends paid on State and local government bonds.  In the case of the FairTax, and specific to taxes collected on the rents and leases of real and personal properties, the tax is not assessed on the property itself or the owner’s income from such property, but assessed on the use (consumption) of the property by the user who must pay the (excise) tax for such use.  


The opposition states, “The mark of an indirect tax is that it is avoidable and, thus, voluntary.”  That comment reflects well on the FairTax which can be avoided by purchasing used vs. new products.  The FairTax also eliminates taxes on items we cannot necessarily avoid, such as food, housing and medicine, which are excluded through the rebate mechanism. 


The FairTax parallels the vision of the Constitution Framers as evidenced by Alexander Hamilton in Federalist Paper No. 22.  “There is no method of steering clear of this inconvenience, but by authorizing the national government to raise its own revenue in its own way.  Imposts, excises, and, in general, all duties of consumption, may be compared to a fluid, which will in time find its level  with the means of paying them.  The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by attention to his own resources.”   The FairTax is in full compliance with the intent of the Founder’s as evidenced from the principle authority on the Constitution, that being the Federalist Papers, and it does not violate any provision of the ‘original’ U. S. Constitution.


Lastly, before the argument is entered that the collection of Federal taxes by the Sates is unconstitutional, allow me to put that one to rest with this from Alexander Hamilton in Federalist Paper No. 36; “the United States will … make use of the State officers and State regulations for collecting the additional imposition (taxes).  This will best answer the views of revenue, because it will save expense in the collection, and it will best avoid any occasion of disgust to the State governments and to the people.”    Therefore, collection of the sales (excise ) tax by the States complies with the Framer’s intent.  It is also voluntary and reimbursement is provided by the federal government to the administering authority though the administration credit.

Comment by John Vettel on May 28, 2012 at 5:45pm

Thanks for doing that research.  

Comment by Bill Rollyson on May 19, 2012 at 7:58am

Hylton v US (1796) was one of the first tax cases heard in the Supreme Court.  Following are some statements by the judges in that decision that give definition to the terms, but first, the courts have been consistent in claiming the U?S government has a complete power of taxation; the only question is to what class a tax belongs:

"For the term "tax" is the genus, and includes (My note: by "tax" here he refers to its use in Art 1, Sec 8 above)

1. Direct taxes.

2. Duties, imposts, and excises.

3. All other classes of an indirect kind, and not within any of the classifications enumerated under the preceding heads."

"The question occurs how is such tax to be laid, uniformly or proportionately? The rule of uniformity will apply, because it is an indirect tax, and direct taxes only are to be apportioned. What are direct taxes within the meaning of the Constitution? The Constitution declares that a capitation tax is a direct tax, and both in theory and practice a tax on land is deemed to be a direct tax. In this way, the terms "direct taxes" and "capitation and other direct tax" are satisfied."

"Whether direct taxes, in the sense of the Constitution, comprehend any other tax than a capitation tax and tax on land is a questionable point."

"All taxes on expenses or consumption are indirect taxes."

Comment by JL Mealer on October 14, 2011 at 6:38pm

The addition I would make (if it were up to me) would exclude life saving medical and add a clause that would redact the amount of federal sales taxes required once the nations jobs expanded to 2% unemployment while requiring a far trade clause to balance out market manipulation. 


Of course, the FT will ONLY work if the Fed Res is replaced with US Congressional funds and the Fed Res usury ends.

Comment by Paul Murphy on October 13, 2011 at 10:51pm

Yeah,  I have no issue with it being defined as an excise tax.  And I don't want to tax individual items.  I think that is the beauty of the Fair Tax. Not picking winners and losers. Can you imagine if we just picked random products to tax each year?  That would keep the lobbyists in business. 


And yes, it is not perfect. But as close to perfect as I can conceive.

Comment by JL Mealer on October 13, 2011 at 9:29pm
A couple of reasoning points come to mind from another post...

Article 1, Section 8, Clause 1: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and General Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States”

The Founders intended for taxation to provide Congress with the power to raise revenue in order to function and to serve and protect the citizenry. And for nothing more. As for the tax base, Federalist #21 explains the advantages of taxing consumption, and how it keeps power in the hands of the People.

Article 1, Section 9, Clause 4: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”

FT is clearly an excise tax for new items, but the uniformity does remain in doubt when certain used items are not taxed at all on the federal level.

HOWEVER, I am having no response from anyone who knows the FT better than I do re:

FIRST: How it can be implemented while we are ALSO paying USURY of Fed Res Notes, and the 6% that Congress is utilizing from the Fed Res Usury per 12 USC 289, Sec. 289. In fact this is a huge red flag for me all of a sudden!

Secondly, I am finding that there is NO answer for the issue where an automobile or home can be properly taxed under FT when the man or woman in charge of either items DOES NOT hold ownership title, but merely Certificate of Title... Technically, the state owns the home and the vehicle because other taxes are still due and payable annually.


The FT needs much more research and with someone like Fed Chair Hermann Cain (RED FLAG) backing it, we MUST question the viability of it.


Keep in mind, I was wholeheartedly for the FT before "lobbyist & Fed Res chairman Cain" became involved and backed the premise of it... After researching it, asking serious questions from the FT people, I am having a few doubts to it's full capabilities as written.


Either way, taxes are a moot issue (esp the 9...(pause)....9..........(big pause................... 9) when America's job situation is dead. Hence MEALER2012.

Comment by Paul Murphy on October 13, 2011 at 8:36pm
I just had this conversation with some Ron Paul supporters. Their contention is that the Fair Tax is not truly an EXCISE TAX. They say that excise taxes are only applied to SPECIFIC items like tea or gasoline, not to an entire class of goods like retail goods.  They say that is interpreting the constitution too broadly. I found a definition that was agreeable to the Fair Tax and they told me we have to go by what EXCISE TAX meant in 1789. How do you respond?
Comment by JL Mealer on September 21, 2011 at 5:21pm

Very good... Let me point out that MEALER 2012 is pro FairTax HR 25, S 13, HOWEVER, the Fairtax cannot be implemented in full force while the US is under the Fed Res USURY laws. The MEALER DEBT PLAN and the MEALER ECONOMIC INITIATIVE explain in detail how this issue may be resolved while supercharging the economy rather than slowing it down during the "change-over' process.

Besides, without the Central Bank backing the corrupted lobbyist owned politicians, the Bills will not pass and be given an opportunity to be signed into law. http://mealer2012.com


Let's make 2012, the year of viable change and dump the lobbyist owned politicians and save this nation!


JL Mealer

Comment by norwegianwood on June 6, 2011 at 2:18pm

I meant to say, the only Constitutional manner for the feds to collect 'revenue'...not 'income' taxes.

(sorry, can't figure out how to edit one's own comments on here...)



Comment by norwegianwood on June 6, 2011 at 2:16pm

Yes. The BIGGEST reason I am FOR the Fair Tax is because, in my opinion, it IS the ONLY Constitutional manner for the Federal gov't to collect income taxes. If you read the 16th Amendment, it does NOT expressly provide the 'methodology' of COLLECTING said taxes, so on its face the 16th Amendment is not 'contradictory' to any of the Ten Amendments of the Bill of Rights. However, it seems to me that there IS a case to be made about the unConstitutional manner that income taxes are collected today.

ANY understanding of the Fourth Amendment right to privacy UNLESS one has been accused by a third party of having committed a crime who has sworn out an affidavit to such the government has NO RIGHT to demand, search or seize PRIVATE information on a citizen. My income is a PRIVATE transaction between myself and my employer; my investments are private; my holdings are PRIVATE. So, how is it remotely Constitutional to not only have money taken out of my pay throughout the year, in advance of ANY 'debt assessment', and use that act to--plus the threat of force, lost liberty, financial penalty etc--to COERCE said PRIVATE information from me? I think the METHODOLOGY in place currently by our government to collect the Constitutional 'income' tax IS in practice a VIOLATION of my Fourth Amendment right to privacy...UNLESS we are to consider that my WORKING to earn an income is a 'crime' that warrants a search of my private information....



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